Green Energy Needs to be Cheaper

So let’s invest in R&D instead of subsidies.

According to International Energy Agency data, 13.12 percent of the world’s energy came from renewables in 1971, the first year that the IEA reported global statistics. In 2011, renewables’ share was lower,at 12.99 percent. Yet a new survey shows that Americans believe that the share of renewables in 2035 will be 30.2 percent. In reality, it will likely be 14.5 percent.

Solar and wind energy account for a trivial proportion of current renewables—about one-third of one percent. The vast majority comes from biomass, or wood and plant material—humanity’s oldest energy source. While biomass is renewable, it is often neither good nor sustainable.

The most renewables-intensive places in the world are also the poorest. Africa gets almost 50 percent of its energy from renewables, compared to just 8 percent for the OECD. Even the European OECD countries, at 11.8 percent, are below the global average.

The reality is that humanity has spent recent centuries getting away from renewables. In 1800, the world obtained 94 percent of its energy from renewable sources. That figure has been declining ever since.

The switch to fossil fuels has also had tremendous environmental benefits. Kerosene saved the whales (which had been hunted almost to extinction to provide supposedly “renewable” whale oil for lighting). Coal saved Europe’s forests. With electrification, indoor air pollution, which is much more dangerous than outdoor air pollution, disappeared in most of the developed world.

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And there is one environmental benefit that is often overlooked: In 1910, more than 30 percent of farmland in the United States was used to produce fodder for horses and mules. Tractors and cars eradicated this huge demand on farmland (while ridding cities of manure pollution).

Of course, fossil fuels brought their own environmental problems. And, while technological innovations like scrubbers on smokestacks and catalytic converters on cars have reduced local air pollution substantially, the problem of CO₂ emissions remains. Indeed, it is the main reason for the world’s clamor for a return to renewables.

To be sure, wind and solar have increased dramatically. Since 1990, wind-generated power has grown 26 percent per year and solar a phenomenal 48 percent. But the growth has been from almost nothing to slightly more than almost nothing. In 1990, wind produced 0.0038 percent of the world’s energy; it is now producing 0.29 percent. Solar-electric power has gone from essentially zero to 0.04 percent.

Yes, Denmark gets a record 34 percent of its electricity from wind. But electricity accounts for only 18 percent of its final energy use.

Moreover, solar and wind will still contribute very little in the coming decades. In the IEA’s optimistic scenario, which assumes that the world’s governments will fulfill all of their green promises, wind will provide 1.34 percent of global energy by 2035, while solar will provide 0.42 percent. Global renewables will most likely increase by roughly 1.5 percentage points, to 14.5 percent by 2035. Under unrealistically optimistic assumptions, the share could increase five percentage points, to 17.9 percent.

Yet we are paying through the nose for these renewables. In the last 12 years, the world has invested $1.6 trillion in clean energy. By 2020, the effort to increase reliance on renewables will cost the European Union alone $250 billion annually.

Current green energy policies are failing for a simple reason: renewables are far too expensive. Sometimes people claim that renewables are actually cheaper. But if renewables were cheaper, they wouldn’t need subsidies, and we wouldn’t need climate policies.

Al Gore’s climate adviser, Jim Hansen, put it bluntly: “Suggesting that renewables will let us phase rapidly off fossil fuels in the United States, China, India, or the world as a whole is almost the equivalent of believing in the Easter Bunny and [the] Tooth Fairy.”

The solution is to innovate the price of renewables downward. We need a dramatic increase in funding for research and development to make the next generations of wind, solar, and biomass energy cheaper and more effective.

Consider China. Despite the country’s massive investment in solar and wind, it mostly sells solar panels to Western countries at subsidized prices. Wind makes up just 0.2 percent of China’s energy, and solar accounts for 0.01 percent.

Meanwhile, China has 68 percent of the world’s solar water heaters on rooftops, because it is a smart and cheap technology. It needs no subsidies, and it produces 50 times more energy than all of China’s solar panels.

When green renewables are cheaper than fossil fuels, they will take over the world. Instead of believing in the Tooth Fairy, we should start investing in green R&D.

This article was originally published by Project Syndicate. For more from Project Syndicate, visit their Web site and follow them on Twitter or Facebook.